Exchanges Say Ruling `Chilling' For Leaders

October 31, 1996|By George Gunset, Tribune Staff Writer.

Chicago's futures markets have complained to federal regulators that a recent administrative law decision apparently would hold exchange officers and directors to a higher conduct standard than regular members.

The exchanges argue in a filing with the Commodity Futures Trading Commission that the decision, involving a former chairman of the New York Mercantile Exchange, could have a "chilling effect" on willingness of members to take leadership positions.

A friend-of-the-court brief was filed by the Chicago Mercantile Exchange and Chicago Board of Trade plus the Coffee, Sugar & Cocoa Exchange in New York on behalf of the appeal of Zoltan Guttman, who headed the New York Merc from 1988 to 1993.

Nachamah Jacobovits, spokeswoman for the New York Merc, said the exchange had been considering a similar filing.

In September, George Painter, a CFTC administrative law judge, found that Guttman was liable for trading violations in sugar options trading on the Coffee, Sugar & Cocoa Exchange. He ordered Guttman to pay a $500,000 fine, revoked his floor registration, and banned him from trading for five years.

Guttman didn't participate in the transactions on the floor but was co-owner of the account in which the trades were made. Guttman argued that he had no knowledge that his partner was going to engage in what the judge found was fictitious trading.

The exchanges' filing said that the "excessive penalty imposed here is apparently informed by the (judge's) belief that (Guttman) should be held to a higher standard of conduct because of his status as chairman of the New York Mercantile Exchange."

They argued that Painter's repeated emphasis on Guttman's position was troubling because no personal misconduct was found and that the "agent's misconduct occurred on a different exchange" in options with which Guttman was unfamiliar.

"If board members and officers of exchanges, simply by virtue of their positions, are subject to greater penalties or a different standard of conduct than others, exchange members will be deterred from taking leadership positions, to the detriment of the exchanges and the public," the brief asserted.